DOI’s $10.7 billion budget has environmental emphasis

Feb. 11, 2008
The US Department of the Interior’s proposed budget for fiscal year 2009 makes environmental protection a priority while increasing access to domestic oil and gas resources, officials said on Feb. 4.

The US Department of the Interior’s proposed budget for fiscal year 2009 makes environmental protection a priority while increasing access to domestic oil and gas resources, officials said on Feb. 4.

DOI’s $10.7 billion budget request, slightly more than what it sought for FY 2008, includes $528.1 million for energy-related programs on lands and in waters under its management, $15.1 million more than what it received for the current fiscal year. It would increase US Minerals Management Service funding by $10.3 million from the enacted amount to $307.1 million, while the Bureau of Land Management’s budget would fall by $5.8 million to $1.002 billion.

But Interior Secretary Dirk A. Kempthorne said DOI agencies involved in energy will continue to take a more deliberate planning approach. “In some of these areas, world-class wildlife habitat sits atop world-class energy resources,” he observed, adding that planning “ridge top-to-ridge top instead of acre-to-acre” is required in such cases.

Following the formal budget presentation, BLM Director James L. Caswell confirmed that his agency has adopted more deliberate planning for oil and gas projects in response to greater public interest. “We can make better decisions if we look across broader areas,” he told OGJ.

Species do not respect boundaries, he explained. They may return once oil and gas operations are complete, but BLM also needs to determine where wildlife would relocate during the interim, he said.

“Will it reduce lawsuits later on? For the people interested in achieving a solution, yes. For those who aren’t, no. But the fact is that we need to take this more thorough approach because it’s the right thing to do,” Caswell said.

Drilling permit charge

The proposed budget also notes that BLM will continue charging $4,000 for each onshore drilling permit application that it processes. It began collecting these fees on Jan. 2 after the charge became a part of DOI’s FY 2008 budget during congressional negotiations in December.

The agency estimates that the fee will raise $22.5 million before its authorization expires on Sept. 30. BLM not only seeks repeal of the 2005 Energy Policy Act (EPACT) provision that bans this charge, but also requests authorization to increase it to $4,150 while the rulemaking is developed.

The agency has identified other areas where it can use such charges to reduce costs, but none of them involve oil and gas, Caswell said. It intends to continue the permit processing program under the energy pilot office project that EPACT authorized because it is working very well, he indicated.

The budget request also includes an $11.2 million increase to $17.1 million for BLM’s well remediation program on Alaska’s North Slope and a $2 million reduction in the oil shale management program because most of its environmental impact statement activities will be completed this year. It proposes redirecting $400,000 from the oil shale program to oil and gas inspections to build on a $2 million increase for FY 2008. Funding for natural gas hydrates research would be reduced by $425,000.

BLM’s budget request also assumes congressional authorization of oil and gas leasing within the Arctic National Wildlife Refuge during FY 2009, which would generate an estimated $7 billion of bonus receipts from an initial lease sale in 2010. Kempthorne said this merely moves ANWR leasing back by a year and continues administration support for opening the area.

Asked about other opportunities to increase access to domestic energy resources, the secretary mentioned reduced environmental impacts from operations. “We’ve learned a lot about oil and gas development onshore, particularly reducing the footprint per well from 8-10 acres to about a half acre. Also, we’ve learned techniques in Alaska to apply onshore in the Lower 48 states, such as using wooden pallets for roads. Interestingly, these pallets do not require extensive land restoration but retain moisture which encourage sagebrush growth,” he said.

MMS budget highlights

The $307 million that DOI is requesting for MMS in FY 2009 includes $160.4 million in current appropriations ($660,000 less than in FY 2008) and $146.7 million in offsetting collections from rental receipts and cost recovery fees. For the first time, the budget would separate offsetting collections (comprised of $133.7 million in rental receipts) from the estimated $13 million of cost recoveries, which would no longer be capped so MMS can retain all of the collected fees.

The proposed budget seeks $8.5 million more to implement the agency’s 5-year OCS oil and gas leasing program, which went into effect on July 1, 2007; $1.1 million more to acquire and maintain geoscientific interpretive tools; and $8.6 million less for the OCS Connect System, which provides an electronic interface between MMS and its customers because the system will be largely improved by FY 2009.

MMS also would receive $2 million to improve its compliance and audit program by implementing recommendations from DOI’s Office of Inspector General. Of that amount, $1.5 million would be used to develop a risk-based compliance tool that would select properties to be reviewed based on additional risk factors such as chronic erroneous reporting or possible fraudulent reporting. Oil spill research funding would be reduced by $180,000 to $6.1 million because of operating efficiency improvements.

Kempthorne said he saw no conflict between MMS’s Chukchi Sea lease sale, which was scheduled for Feb. 6, and the US Fish and Wildlife Service’s decision whether to list the polar bear as an endangered species, which has been delayed until later this month. When FWS began to examine the situation, it identified melting sea ice as the primary threat and not oil and gas operations, he said.

Leases would be at least 25 miles offshore, he noted. “The initial production, in all likelihood, would be 10-15 years from now during which there would be extensive public comment,” the secretary said.

DOI’s Ocean and Coastal Frontiers Initiative also includes a $4 million component to assist in mapping and defining US jurisdiction of the extended OCS.

The US Geological Survey would work with the National Oceanic and Atmospheric Administration to map the sea bed. Kempthorne said this will occur even if the Senate does not ratify US participation in the international Law of the Sea treaty, but added that talks are continuing to make this happen.